Inflation

Federal Reserve Chair Kevin Warsh framed the central bank's move to increase interest rates as a moderate adjustment to rapid economic growth during his post-Federal Open Market Committee press conference.

Economists in a recent Bloomberg survey expected policymakers to hold their outlooks for unemployment and inflation largely unchanged.

nterest-rate swaps showed traders ramped up bets on higher benchmark rates in the months ahead, with sticky price pressures seen pushing policymakers led by Fed Chairman Kevin Warsh to act.

The consumer price index rose 0.4% last month, in line with July's reading. For a monetary policy committee that has been split on inflation, the inconclusive report will compel the Fed to make a call on whether to raise interest rates or stay put.

The U.S. economy added 162,000 jobs in August, bouncing back from a surprise decline in July. The Fed's next interest rate decision will still hinge on next week's inflation reading.

Waller said he was "willing to support holding the policy rate at its current level" if inflation continued moving toward the Fed's 2% target.

Federal Reserve Bank of New York President John Williams said Wednesday that inflation expectations remain well anchored, suggesting a "wait-and-see" approach for monetary policy.

The move started on Friday after Federal Reserve Chairman Kevin Warsh doubled down on his vow to finally tame inflation, and has extended as energy prices rose on conflicts in the Middle East.

The Bureau of Economic Analysis reported that the personal consumption expenditures, or PCE, price index rose 3.7% from a year earlier, indicating that inflation remains above the Federal Reserve's target.

His action after 10-year Treasury yields, his self-specified financial benchmark, rose above where they were before Trump returned to office, shows mounting worries in Washington.

The forces he sees at work include inflationary pressures from the AI buildout, exacerbated by tariffs, labor constraints and oil-price spikes.

Near-term expectations for price growth fell in the latest consumer sentiment survey from the Federal Reserve Bank of New York, but remains above the central bank's target across all time horizons.

The latest consumer conditions study from the American Financial Services Association paints a less-than-rosy picture of how lenders expect the second half of the year to play out.

Yields fell across maturities by four to six basis points, with the yield on the two-year note reaching the lowest level since July 20 and the benchmark 10-year yield at 4.62%.

With worries that the Fed may not act quickly enough to tamp down inflation pushing 30-year yields to their highest level since 2007 in recent days, the cost of hedging against deeper losses is growing.

The property market has been held back in recent months by elevated borrowing costs, which had fallen below 6% in late February before the Middle East conflict boosted energy prices.

Some market participants are taking a 'hawkish hold' FOMC reading coming out of the July meeting, even as they adapt to a quieter intermeeting chairman.

Yields on Tuesday were higher by roughly two to four basis points across maturities, with the 10-year yield rising to touch its highest since late May at 4.64%.

The Labor Department report that US consumer prices in June saw the first monthly drop since 2020 was met with relief in financial markets.

Reports on US consumer and producer prices, showed more deceleration that economists had estimated. As a result, the outlook for Fed policy shifted from two quarter-point hikes by mid-2027 to include the possibility of just one hike.